![]() Setting up a budget gives you a clear idea of what’s coming in and going out of your account. Budgeting puts you in controlĪ good budget helps you prioritise your spending and stay on top of your monthly expenses as you decide how to use and save your money. Good personal budgeting can give you control as well as financial freedom and flexibility, among many other advantages. ![]() Financial talk show host and writer, Dave Ramsey, said it best: “A budget is telling your money where to go instead of wondering where it went.” And while many may associate budgeting with restrictions and limitations, it can be quite the opposite.Ĭreating a budget can help you determine whether you have enough money to do the things you need to do – and the things you want to do. Reducing these payments is an important step toward improving your financial well-being.Budgeting is a powerful tool to manage your money. Managing your debt load - the sum total of all of your loans - will help you get a better handle on your financial health. Whether you’re working on paying off a mortgage or student debt, take time to evaluate how to most effectively pay down your loans. Check out the Emergency Fund calculator to get started. Think about ways you can divert money to your savings on a monthly basis to start building or growing an existing fund. When reevaluating your finances, make sure to account for emergency fund savings so that you’re prepared to handle any unexpected costs. Do you have funds set aside in case of a major unplanned expense? Building a substantial emergency fund that covers between three and six months’ worth of living expenses is key to a secure financial foundation. Use our Budget Worksheet to get started on evaluating your personal finance situation.Īfter creating your budget, it’s important to protect the money you are saving for the future. It may take time to find the balance that works for you. Keep track of your monthly income and expenses to make sure you’re sticking to your budget. Creating a budget is just the first step. ![]() If it’s negative, your expenses are greater than your income, and you will need to trim them in order to begin living within your means. If the result is a positive number, congratulations – you’re spending less than you earn. It’s a simple step that can reveal a lot about your spending habits. Once you’ve totaled up your yearly income and expenses, subtract the expense total from the income total to get the difference. If some of your expenses change significantly each month, estimate the monthly expense with a three-month average of that category’s total. Divide your expenses into fixed costs (those that don’t change from month to month, such as rent and insurance payments) and flexible expenses (costs that change, such as food and entertainment). To easily track your spending, check out the tools offered by your checking account, like downloading credit or debit card statements or scanning receipts with your smartphone. The best way to do this is to keep track of how much you spend in a month. ![]() And if taxes aren’t automatically taken out of your paycheck, remember to include them as another expense. If you earn a salary, be sure to list your take-home pay rather than your gross pay. To create a monthly budget, you should first determine how much income you have by listing your monthly income including salaries, interest, pension and any other sources, such as a spouse’s income. When you assess your finances, follow these steps to ensure you’re making smart decisions that prepare you for the future. Fortunately, most of the information you need is at your fingertips. It’s a good idea to evaluate your finances periodically, especially if you’re planning a major purchase like a new car or home or if there are any significant changes in your income or expenses.
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